Good morning. Well it was bulls one, bears nil yesterday. We got the dip to the pivot early on instead and then a steady rise all day, slight pause at the 6850 to pick up a few for the short but the rest of that trade then got stopped out. We have a 15.6 divi being applied to the FTSE today as well so bear that in mind if you are holding a position at the close. Somewhat out of kilter gold rose a lot yesterday as well as the indices, so are we seeing the last bullish hurrah on equites? Talk has resumed about interest rate rises – think we will see them in Q4 or Q1 2015, even just 25bps. They won’t put them up much before the election but will just need to use them to control the economy which is doing better (so say) than almost everyone else! All the bears need is the biggest bear sign of them all – the BBC TV news to start running headlines on the FTSE 100 at record highs or some such and then it will be downhill for a while!
Asia Overnight from Bloomberg
Asian stocks rose, with the regional benchmark gauge on course for its biggest increase in seven weeks, as investors weighed earnings and after U.S. equity indexes climbed to records.
The MSCI Asia Pacific Index gained 1 percent to 139.19 as of 1 p.m. in Tokyo, heading for the steepest advance since March 24, as all of its 10 industry groups rose. U.S. Federal Reserve Chair Janet Yellen is due to speak May 15 after tempering concern last week that an improving economy will drive interest rates higher.
“Rates are locked in a low level and we don’t have any scares in terms of inflation and any factor that’s going to require the Fed to taper a lot quicker than they stated,” said Tim Schroeders, a portfolio manager who helps oversee $1 billion in equities at Pengana Capital Ltd. in Melbourne. “The market is comfortable with that at this stage.”
Futures on the Standard & Poor’s 500 Index rose less than 0.1 today. The S&P 500 and the Dow Jones Industrial Average both rallied to records yesterday as Internet and small-cap shares increased amid deals activity that boosted confidence in the world’s biggest economy.
Regional Gauges
Japan’s Topix (TPX) index jumped 1.7 percent and South Korea’s Kospi index rose 1.1 percent. Australia’s S&P/ASX 200 Index advanced 0.7 percent, while New Zealand’s NZX 50 Index added 0.6 percent. Taiwan’s Taiex index rose 0.2 percent. Markets in Malaysia, Singapore, Thailand and Bangladesh are closed for a holiday.
Hong Kong’s Hang Seng Index advanced 0.3 percent after jumping the most in seven weeks yesterday on optimism state reforms will boost equity markets. The Hang Seng China Enterprises Index of mainland companies added 0.2 percent. The Shanghai Composite Index slid 0.1 percent. Data on China retail sales and industrial output are due today.
China’s broadest measure of new credit fell last month as authorities extended their campaign to tame financial dangers even as construction and manufacturing data point to risks that the economy’s slowdown will worsen. Aggregate financing was 1.55 trillion yuan ($248 billion) in April, the People’s Bank of China said yesterday in Beijing, compared with 2.07 trillion yuan in March.
Among companies on the Asian gauge that reported quarterly results since April 1 and for which Bloomberg had estimates, 53 percent beat earnings expectations as of yesterday, according to data compiled by Bloomberg.
The Asia-Pacific gauge traded at 12.6 times estimated earnings as of yesterday, compared with 16.1 for the S&P 500 and 15.2 for the Stoxx Europe 600 Index, according to data compiled by Bloomberg.
FTSE Outlook
Well it certainly feels like the indices are all getting very excited and the party is going to end soon. More and more headlines about record highs and so on are usually a warning sign (look at when Apple hit $700, gold nearly got $2000, etc etc) – those levels made mainstream headlines and over the next few weeks/months generally halved! Anyway, the FTSE looks like it might well reach the 6900 area where we have R3 and also the 10 day Bianca channel – so a good area to look at shorts, but reaching that hinges on whether the bulls can keep the momentum going to break through this 6875 area.
Today sees a 15.6 divi as well so we may get some divi hunters at the close for a little run up around 16:00 to 16:30.
Todays pivot is 6839 with 6823 support below that, then 6811.
The S&P is also nearly at a fairly key round number of 1900 so likely to see a little bit of bear around here (maybe 1901 to be little more exact).
We have a fairly narrow, and slightly weak 30 minute channel in play, but i think we might see a dip first thing from this 6875 area, possibly only as far as the bottom of that channel and the coral area, before bouncing. If that area doesn’t hold then the pivot at 6840 might well do.
My 2 favoured trades today would be shorts at 6875 and 6900.